Entrepreneur or Freelancer – What’s the Difference?

man working at laptop in front of white boardFrom tuts+, David Masters discusses the difference between a freelancer and an entrepreneur.  Entrepreneurs are typically independent contractors, while freelancers might be classified as employees or independent contractors depending on the services and the standard that is being used to make the determination.  David does a great job at highlighting some key differences between freelancers and entrepreneurs and it is helpful to remember those differences when thinking about properly classifying workers as employees or independent contractors.  He writes:

“Entrepreneur or Freelancer – Basic Definitions

The Oxford dictionary defines an entrepreneur as:

A person who sets up a business or businesses, taking on financial risks in the hope of profit.

Meanwhile, a freelancer is:

Self-employed and hired to work for different companies on particular assignments.

Entrepreneurs find a gap in a the market. They discover a need, and they have an idea to meet that need. They take a risk with their own (or an investor’s) money to set up a business that meets that need.

Freelancers also identify needs. But rather than looking for a gap in the market, they look for established markets, and become a competitor in that marketplace. For example, there are lots of businesses that need and already pay for logo design services, so logo design is an established market. Freelancers don’t take on big financial risks. They look for clients, then do the work the client requests in exchange for payment.

That’s the basic difference between entrepreneurs and freelancers. Let’s take a look at some of the other key differences between freelancing and entrepreneurship.

Entrepreneur or Freelancer – The Fundamental Differences

Where Their Time Goes

There are fundamental differences in how freelancers and entrepreneurs approach time.

As a freelancer, you only get paid for the hours you work. On the other hand, as an entrepreneur, if your business is successful you earn money around the clock.

Here’s how Seth Godin explains it:

Freelancers get paid for their work. If you’re a freelancer copywriter, you get paid when you work. Entrepreneurs use other people’s money to build a business bigger than themselves so that they can get paid when they sleep.

That’s not to say that being an entrepreneur is a cakewalk. Many entrepreneurs work hours equivalent to two full-time jobs. But when an entrepreneur’s ideas pay off, they’re rewarded handsomely for the hours they’ve put in and the risks they’ve taken.

Freelancers also work incredibly hard. According to a study cited in The Economist, freelancers work an average of 6% more hours per week compared to those in employment. That said, as a freelancer, you have the option of a flexible lifestyle. You can fit your work around whatever else is going on in your life, and you can choose how much or little you work. As an entrepreneur—at least during the early stages of your journey—you’ll be on the go nonstop….”

Read the full story at Entrepreneur or Freelancer – What’s the Difference?

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